- Twenty‐Five Years of Indian Economic Reform
- Growth Strategy
- The charts that show how Deng Xiaoping unleashed China’s pent-up capitalist energy in 1978
- World Bank sees policy reforms as crucial to economic growth in MENA | | AW
These changes were forecast to lead to significant and wide economic gains for Australia, and they did. An important reason the reforms came about were the gains forecast in by the then Industry Commission. These were substantial, and are shown in Exhibit 6.
- Gains since 2011.
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They assumed that the reforms are fully implemented and that the economy had fully adjusted to the reforms. I would, however, approach any assessment of the actual gains from the reforms from three angles, as follows:. While the sectors shown in Exhibit 7 were the main sectors affected by the NCP reforms, there were effects across all of the economy, as shown in Exhibit 5, and the calculations excluded the all important dynamic efficiency gains.
The modelling also did not pick up the impact from reforms undertaken after or the impact of earlier reforms not realised until after One argument made against the reforms was a concern that they would advantage the wealthy and disadvantage the poor. Some argued that those Australians on low income, or that Australians living in rural or regional areas outside the cities, would be worse off.
The Productivity Commission, therefore, also incorporated a distributional component into its modelling. This showed that the benefits from the reforms flowed broadly among Australians.
Real incomes rose across all income brackets, as shown in Exhibit 8, although the average income gain was not equal. While it is not possible to isolate the impacts of the NCP reforms from many other factors, it is telling that in a number of areas targeted by the NCP reforms there were significant price reductions, as follows:. It must be acknowledged, and it is not surprising, that there was a net employment reduction across all infrastructure sectors of 31, between and , as shown in Exhibit 9. This Exhibit also shows the effect of privatisation. It should be noted, however, that the declines occurred in the first half of s, and were then followed by increases.
Indeed, after declining by 50, jobs between and , total employment in the infrastructure sectors increased by 19, in the subsequent eight year period. There were other effects which could be seen as negative, but which were in fact intended. For example, urban water prices increased, in some cases significantly, as it was recognised that artificially low water prices encourage excessive consumption of a scare resource, and blunt investment signals. When looking at aggregate numbers it is hard to determine cause and effect.
By the NCP reforms had contributed significantly to a productivity surge that has underpinned 13 years now 21 years of continuous economic growth. This relative productivity performance also translated into a strong relative growth performance, as show vividly in Exhibit 11 . It is also worth noting that the rate of increase in per capita incomes in the second half of the s was as high in Australia as at any time in the 20 th Century, and that unemployment was at its lowest level in three decades.
While, as previously stated, cause and effect is difficult to determine, the tangible benefits and then the overall dynamism generated by the reforms must take significant credit.
Twenty‐Five Years of Indian Economic Reform
Indeed, there was a clear 'feel good' effect. As Exhibit 12 shows, by the late s Australia had regained its per capita GDP rating and in it still ranked 5 th. In one way or another I worked as a development economist in around 15 developing countries in Africa, Asia, the Pacific and the Caribbean. Recently, just prior to taking my current position, I was again on a part time basis working in economic development in the Asian region. Combining this background with my Australian experience leads to the following personal observations. First, I see pro competition policies providing even larger gains for developing countries.
Not only do such policies drive growth but they also can improve governance, allow new market entry for those who otherwise may have few opportunities, and they can drive rapid introduction of new technology. We still hear this argument in Australia. The argument is that a country needs strong, large, domestically owned companies for its economy to thrive.
They are, however, only of benefit if they achieve their status by out-competing their local opposition. If governments grant them this status they will generally become bloated and lazy, and overcharge their customers. Third, it follows that particularly in developing countries competition policy needs to go well beyond narrow competition law enforcement. Monopolies need to be dismantled, competition needs to be introduced into new areas and competition law needs to cover state owned enterprises. Finally, competition agencies in developing countries will usually need to have a larger advocacy role to take on vested interests and government restrictions.
This can be a challenging role.
A courageous story of leadership by a competition agency head from Papua New Guinea illustrates this. Papua New Guinea is a country that I have lived in and visited many times. But it is extremely rugged, and the vast majority of the population lives in small centres and villages, making communication difficult. In , the state-owned Telikom was the only provider of mobile telecommunications services in PNG, with a network that had about sixty thousand subscribers.
It was widely recognised that a national mobile network, or at least something approaching it, would be a boon to PNG. To achieve this, the then Government decided as part of a wide ranging reform agenda to introduce competition in mobile telephony to the country.
The economic and social outcomes of introducing competition were then plain: Digicell very quickly put up cellphone towers, many of them in very rugged country, that provided service to around 1. I saw first hand that the improved telecommunications literally opened up the world to those who needed it most. Weak infrastructure was replaced with new services, allowing people living in remote areas to access mobile banking services, schools and hospitals; and providing entrepreneurs with better information to do their current business and get involved in new businesses.
But there is still an active debate on the relative merits of free market discipline. Sustaining public and political will for economic reform and placing overall economic gain ahead of vocal vested interests requires constant vigilance and advocacy. Competition authorities have a key role here — both in enforcing competition laws without fear or favour and in advocating the benefits of competition across the economy. I believe competition reform is the only way to ensure economic growth and to see that national living standards are sustained in the long term.
I also believe that this is true for both developed and developing economies. Skip to Content Skip to Sitemap. Home Media Speeches. World Bank Forum - Making markets work for development: a reform agenda on competition. Competition policy reforms in Australia and the changes made Around Australia had the highest level of labour productivity in the world, which reflected a relative abundance of natural resources and a small population. By Australia had slipped to 14 th , as shown in Exhibit 1 . Tags Audience. Reforming regulations which unjustifiably restrict competition. Reforming the structure of public monopolies to facilitate competition.
Proposed restructuring of energy utilities in several States. Providing third-party access to certain facilities that are essential for competition. Access arrangements for the telecommunications network.
Moreover, the adoption of Industrial Responsibility System s further promote the development of state-owned enterprise by allowing individuals or groups to manage the enterprise by contract. Private businesses were allowed to operate for the first time since the Communist takeover, and they gradually began to make up a greater percentage of industrial output.
The charts that show how Deng Xiaoping unleashed China’s pent-up capitalist energy in 1978
Deng created a series of special economic zones for foreign investment that were relatively free of the bureaucratic regulations and interventions that hampered economic growth. These regions became engines of growth for the national economy. During this period, Deng Xiaoping's policies continued beyond the initial reforms. Controls on private businesses and government intervention continued to decrease, and there was small-scale privatization of state enterprises which had become unviable.
A notable development was the decentralization of state control, leaving local provincial leaders to experiment with ways to increase economic growth and privatize the state sector. Although the economy grew quickly during this period, economic troubles in the inefficient state sector increased. Heavy losses had to be made up by state revenues and acted as a drain upon the economy.
World Bank sees policy reforms as crucial to economic growth in MENA | | AW
China's government slowly expanded recognition of the private economy, first as a "complement" to the state sector and then as an "important component" of the socialist market economy. In the s, Deng forced many of the conservative elders such as Chen Yun into retirement, allowing radical reforms to be carried out. In and , large-scale privatization occurred, in which all state enterprises, except a few large monopolies, were liquidated and their assets sold to private investors.